Blue Shield agrees to 60-day delay in rate increases

Blue Shield of California agreed Tuesday to delay its March 1 rate increases on individual health insurance policies for 60 days while the state insurance commissioner reviews them. State Insurance Commissioner Dave Jones said he requested the delay because of a series of increases Blue Shield proposed that could mean an accumulated 59 percent jump for some policyholders.

In a statement issued by the company, Blue Shield Chief Executive Bruce Bodaken said, “we are taking this action to remove any doubt that the rates we have submitted are necessary to pay the medical expenses of our individual members and meet the new medical loss ratio standard.”

The “medical loss ratio” is part of a new federal law that requires insurers to spend 80 percent of premium revenue on health care costs or rebate consumers.

On his first day in office last month, Jones called on four major health insurance companies to delay rate increases for 60 days while he reviewed them. Last week, Anthem Blue Cross, PacifiCare and Aetna agreed to the delay. Blue Shield said it had hired an actuary to do an independent review.

On Tuesday, Jones said he was “pleased” that Blue Shield had changed its stance.

Blue Shield raised rates an average of 19 percent in October and an average of 4 percent on Jan. 1, and had planned a 6.5 percent average increase on March 1.

Before agreeing to the 60-day delay, Anthem Blue Cross had planned to increase rates an average of 9.8 percent on April 1 for individual policies. PacifiCare delayed a 2-9 percent increase that started Jan. 1 and Aetna delayed an increase of 20.7 percent set for April 1 for a small group of policyholders whose premiums weren’t raised in October.

Jones has only limited authority over health insurance rates, and can only reject them if less than 70 percent of the premium cost is spent on health care.

In his statement, Bodaken said that even with the rate increase, the company expects to lose money this year because of the "explosive growth in the cost of medical care."

"We have long supported comprehensive health reform as a way to repair the broken individual health insurance market and to reduce long-term costs," he said. "The Affordable Care Act is a step in the right direction and we are working diligently to implement the law as effectively as possible."